LINDA MOTTRAM: East Timor's fledgling Parliament has made a key
decision about the nation's borders, which could be the first big test of
its relations with Australia. It's declared a maritime boundary with
Australia that would give East Timor full ownership of lucrative oil and
gas deposits, which now fall inside Australian waters.

From Darwin, Anne Barker reports.

ANNE BARKER: It's a high stakes gamble that could bring vast wealth to
a struggling nation or end in an international legal wrangle. East Timor
has formally staked a claim to huge oil and gas reserves that Australia
counts as its own, and on a trade visit to Darwin, East Timor's President,
Xanana Gusmao, put his nation's cards squarely on the table.

XANANA GUSMAO: We are not asking for less or more than the
international law allow us to claim.

ANNE BARKER: East Timor's parliament has approved legislation that puts
the maritime boundary with Australia 200 nautical miles from the Timorese
coast, well beyond the halfway mark. It takes in all of the lucrative
Sunrise field, 80% of which is now in Australian waters, and other vast
reserves Australia partly or wholly owns. Jonathan Morrow heads the East
Timorese government's Timor Sea office in Dili.

JONATHAN MORROW: Well there's nothing in international law that
requires us to limit our claim to a halfway mark. All East Timor is doing
is making the maximum claim to which it is entitled under international
law.

ANNE BARKER: Do you agree that it could be seen as provocative?

JONATHAN MORROW: No I don't believe that the Australian government will
see that as provocative. All we're doing is exercising the right of any
newly independent nation, which has no maritime boundaries.

ANNE BARKER: In Australia's eyes, its own territorial waters extend to
the edge of the continental shelf, conveniently north of the seabed's
biggest spoils. It all depends now on the extent of Australia's goodwill
and international law expert, Donald Rothwell, believes Australia has the
upper hand.

DONALD ROTHWELL: The Timor Sea Treaty concluded back in May between
Australia and East Timor does in fact recognise that there is continuing
obligation to negotiate a permanent boundary between the two countries.
But of course we know, that Australia has removed itself from the
jurisdiction of the International Court of Justice and as a result it will
impossible for East Timor to force this case into the ICJ.

ANNE BARKER: So who's going to ultimately win?

DONALD ROTHWELL: Well that's a very difficult one to say at the moment.
I think that there is certainly some prospect of East Timor trying to
launch some litigation against Australia, whether that litigation would be
successful or not remains to be seen. But it's quite clear that, as I
said, from this action that East Timor is not going to step down or step
away from this particular dispute.

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